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Mike Jacobs: Taxes, tariffs and trade? Oh my!

This column is about tariffs. Wait! Don't stop reading yet. There's something interesting at the end.

Tariffs have been a recurring issue in North Dakota, and they are one factor in the "position of economic disadvantage" that historian Elwyn Robinson identified as one of the themes in the state's history. That was 60 years ago, nearly half of the state's history. Today's headlines reinforce Robinson's insight.

This is at least the fourth time that trade and tariffs have intruded in North Dakota politics. Although the results have been inconsistent, the importance of tariffs is evident. Tariffs pack lots of political power. In North Dakota they have made national reputations and ended political careers.

As a producer of commodities, the state depends on export markets to a greater degree than most other states, and it always has. Economic disadvantage works the other way, as well; the tools needed for production are manufactured at least partly from imported raw materials, or more likely these days, assembled from parts made elsewhere. In other words, both economic inputs and outputs can be — and have been — subject to tariffs.

In general, business interests favored tariffs while populist farm interests opposed them — but only in general. When it comes right down to it, both groups have acted in their own interests.

William Nathaniel Roach was the first beneficiary of tariff politics and also its first victim. Trade policy had little to do with his election by the 1893 Legislature, but it became central to his Senate career. He opposed high tariffs. The political winds were from a different direction in 1899, when the Legislature turned Roach out of office, choosing Porter J. McCumber instead. McCumber held the office for 24 years and became one of the most influential North Dakotans ever to serve in Congress. McCumber became chair of the Senate Finance Committee, and his named was attached to the Forney-McCumber tariff, passed in 1922, which raised tariffs and set the stage for the more famous Smoot-Hawley tariff passed in 1928. McCumber wasn't there; he lost the 1922 election to Lynn J. Frazier, candidate of the Nonpartisan League, enemy of tariffs and advocate of taxing wealth rather than consumption. Frazier had been recalled as governor only a year before, underlining McCumber's unpopularity.

Trade is linked to the career and reputation of a third U.S. senator from North Dakota. Byron Dorgan gained national attention and built political support in North Dakota with a full-throated attack on NAFTA, the same trade agreement that President Trump has targeted. The North American Free Trade Agreement was negotiated during the 1990s, and Dorgan led opposition to it, warning that it would damage the U.S. sugar industry and disadvantage grain growers. The first threat was resolved amicably but the second led to protests about Canadian efforts to manipulate markets, especially for wheat, and to efforts to block traffic at border crossings. The grievance dissolved when the Canadian government ended its monopoly on grain trading, and NAFTA is now regarded as a pretty good deal for North Dakota.

President Trump has targeted NAFTA as a bad trade deal; negotiations have been stalled. This is the less pressing of trade issues facing North Dakota this election year. That doesn't mean it is inconsequential, of course, but the issues are mostly over manufacturing inputs, especially steel and aluminum, now subject to tariffs that raise costs for North Dakota manufacturers. The president has raised one ag issue, Canada's program to protect dairy farmers by taxing some imports of U.S. milk products, but this disagreement isn't vital to North Dakota.

Not so with soybeans. North Dakota ranks among the top soybean producing states, and most of the crop goes overseas, especially to China, which takes up to 70 percent of North Dakota soybeans. In North Dakota, soybeans have consequences.

It's not clear though what the consequences might be in this fourth intrusion of trade in North Dakota politics. Republican candidates bravely present the rhetoric, and even the reality, of tariffs as a negotiating strategy, and economists are weighing which economy might be more vulnerable if this dispute goes to the long run. What is clear is that talk of tariffs has created uncertainty in a state that is already rattled by weather conditions, depressed farm prices and rising input costs — due in part at least to tariffs on imported raw materials that become parts in farm equipment.

That might be part of the reason that the Kevin Cramer campaign objected to my report last week that the Senate candidate had endorsed the president's policies "100 percent." Cramer was talking only about three issues, "rolling back regulations, cutting taxes and pro-life," his campaign communications director Tim Rasmussen, told me in an email.

Or maybe he just wanted to point out that I was wrong again.

OK. You can stop reading now.

Mike Jacobs is a former editor and publisher of the Herald.

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